GDP grows at 5% in Q1: Slowest pace in over 6 years

Friday (August 30): Lowering consumer demand, dipping private investment and added flavour of world trade war have slowed down the GDP growth rate in the first quarter of current fiscal year (2019-20). During April-June 2019, the GDP grew at 5%, government data showed today.

Compared to this quarter, previous quarter had recorded growth rate of 5.8% and the rate was 8% during Q1 of the previous fiscal year (2018-19).The growth has decelerated to a straight fifth quarter.

Some analysts expect that the slowdown could continue for the next two to three years as the economy is facing some serious structural issues, hurting consumer demand and manufacturing. “The government needs to address structural and cyclical issues to address the economic slowdown,” said Devindra Pant, chief economist of India Ratings, an arm of Fitch Ratings, citing a slowdown in the sales of autos and construction and a dip in consumer demand.

The RBI expects GDP growth at 5.8-6.6 per cent in the first half of 2019-20, and 7.3-7.5 per cent in the second. Earlier this month, the Reserve Bank of India while cutting the repo rate by 35 basis points lowered its real GDP projection for the current financial year to 6.9 per cent, from 7 per cent.

In a historic move, Finance Minister Ms. Nirmala Sitharaman today announced a slew of measures of merger of banks. She also said that more measures to boost the economy will follow in the coming weeks.

Major Banking Merger Reforms announced: The earlier 27 PSBs will now become 12